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The Vault

The Vault

While the IoT market in general was slow to capture the public's imagination prior to 2017, one area where IoT is blooming is in the smart city and smart building industry; mass rollouts of IoT in an industrial setting, including urban environments and business hubs, are beginning to garner success. This InterDigital-sponsored white paper dives into the opportunities that smart buildings and other smart cities infrastructure projects offer for telcos and the challenges they face in pursuing such industrial IoT deployments.

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Smart city technologies could save enterprises, governments and citizens globally over US $5 trillion annually by 2022. This is the conclusion reached by ABI Research in this new white paper, which analyzes the scope for cost savings and efficiency as a driver for smart city deployments, smart technologies and the...

Smart cities:
What are the opportunities
and threats for telcos?
Sponsored by
Telecoms.com Intelligence / Smart cities: what are the opportunities and threats for telcos?
Introduction
There has been plenty made of the future
market size of Internet of Things (IoT), and
almost everyone in the telecoms industry is
very familiar with numbers claiming ?IoT will
be worth billions by 2020?. However, it would
be fair to say that the IoT market in general
failed to capture the public?s imagination in
2016, with the majority of consumer offerings
being picked up by early adopters and tech
enthusiasts ? it will still take some time before
IoT solutions are more pervasive in society.
However, that said, one area where IoT is
beginning to have an effect is in the smart
cities and smart buildings industry. Mass
rollouts of IoT in an industrial setting, including
urban environments and business hubs, are
beginning to garner success. If one were to
look at the most recent figures, the opportunity
for industrial applications of IoT in global cities
becomes all the clearer and more compelling.
According to Gartner, there are now more
than 220 cities across the world housing more
than 1 million citizens. Of said 220, 90% are
in emerging markets. In respect of varying
levels of affluence across these 200-odd cities,
it would still be fair to make the assumption
that deploying even the most rudimentary
IoT-ready sensors should be possible. With
that in mind, the opportunity for smart cities
infrastructure, and specifically the building out
of smart buildings, is abundantly clear.
This paper will investigate the smart cities
opportunity, and how the smart building
figures as part of a city-wide IoT strategy.
More importantly, we will look into how the
telco typically figures as part of such IoT
deployments.
Setting the scene
Some of the principal use cases for IoT across
a city focus on integration between the city?s
infrastructure and the connected car. The
momentum behind the connected car refuses
to relent, as has been illustrated by the frenzy
of activity at 2017?s Consumer Electronics
Show in Las Vegas. It stands to reason,
therefore, that any city-wide IoT strategy
should factor in road-based transport as one of
its key elements.
In the infrastructure space, you might see more
players coming together when they realise that
smart cities technology can be more than just
practical, it can be lifesaving. In the connected
car area there?s a lot of work going on with V2X
(Vehicle-to-Anything) and the development
of V2V (Vehicle-to-Vehicle) to standardise
protocols between vehicles.
When it comes to autonomous driving, and
the move towards level 3, 4 or 5 autonomy,
the vehicles need to be able to communicate
with each other. That in itself is driving
more standards work, and it?s likely that full
autonomy won?t be achieved for another five
years at least.
Such inter-vehicle connectivity brings into
question the role of the telecoms operator in
the future IoT industry. Historically everyone
would consider the telco to be the glue that
holds together entire technology industries
requiring connectivity. However, in recent years,
the emergence of alternative IoT proprietary
networks, such as SIGFOX and LoRA, have given
birth to a significant threat to the operator?s
position within the industry.
Smart cities: what are the opportunities
and threats for telcos?
About InterDigital:
InterDigital, Inc. designs and develops
advanced technologies that enable
and enhance mobile communications
and capabilities. Since our founding
in 1972, our engineers have designed
and developed a wide range of
innovations that are used in digital
cellular and wireless products and
networks, including 2G, 3G, 4G and IEEE
802-related products and networks.
For over four decades, InterDigital has
been a pioneer in mobile technology
and a key contributor to global wireless
standards. Our team of approximately
160 engineers ? approximately 80
percent of whom hold advanced
degrees, including over 50 PhDs ? has
unparalleled expertise in major mobile
connectivity and content delivery
technologies. Since 2000, InterDigital
has spent over $1 billion on technology
research and development.
Telecoms.com Intelligence / Smart cities: what are the opportunities and threats for telcos?
How does the telco figure?
While 2016 saw significant growth of these
alternative players, research interviews
conducted by Telecoms.com have suggested
that the broader services offered by the telco
are irreplaceable and absolutely fundamental
to the successful delivery of IoT strategies ?
particularly across smart building and smart
cities projects.
One incredibly important factor comes down
to access to the core network and delivery of
OSS/BSS functionality in the backend. When it
comes to IoT and smart connectivity, whether
it?s in buildings or on city streets, it?s extremely
important to have work flows that the service
providers are able to support based on the
execution of the work flow and the billing
of it. If smart city or smart building projects
don?t have core OSS and BSS implemented,
customers won?t be appropriately charged for
the services they?re using.
Elsewhere, the telco is vitally important when
it comes to onboarding new customers of
IoT services. The average portfolio of IoT
services provided by a telco would average
out at roughly several thousand devices. The
telco itself needs to have a standardised
framework for onboarding those devices,
ensuring interoperability of which device
talks to which. It?s not just at a protocol level,
but also about understanding what data is
coming off of which devices. How is that data
capable of being cleaned or scrubbed and
analysed in the most appropriate fashion ?
it?s down to the capabilities of the telecoms
operator.
To make all of this possible, the telco is also
becoming increasingly responsible for developing
and delivering the dashboard and user interface
that it sells to enterprise customers. With a
sophisticated dashboard, enterprise users are
able to analyse the data being generated by
IoT applications, and can appropriately query
or visualise it. Teams of data scientists are
building out algorithms to test hypothesise, to
recommend action based on analysed insights.
An interesting development in the smart
buildings space at the moment is how
government and cities are driving their
own agenda and competitive strategy with
regards to attracting business and growing its
GDP. This strategy has seen a reverse in the
traditional telco/client relationship. No longer
is technology adoption driven by the telcos
pushing solutions anymore, instead it?s all
about demand from the building developers
and the city in which the structure will be
developed. The fact that cities now employ
their own CIOs today is a telling indication of
the demand-supply relationship power shifting.
Once the property developers have decided
what they want from a technology solution
and fully defined its requirements, they can
then approach the operator to find out how
they are able to provide the appropriate
services. In many Western cities, fibre to the
home (FTTH) is beginning to be developed as
standard in new office blocks, retail spaces
and apartment complexes. FTTH can cater for
seemingly infinite bandwidth requirements,
and will, in all likelihood, form the backbone of
the future smart building.
Driving efficiency
While FTTH is being built-in as standard today,
is there an opportunity for IoT sensors and
capabilities to be developed as standard in the
future? There would certainly be a significant
business justification, and in this case it is
worth considering the vast efficiency gains
of building in IoT functions as part of future
building designs.
Principally, there?s the opportunity to
significantly reduce energy and resource
consumption. Latest figures from the United
Nations Environment Programme claim that
buildings are responsible for the following:
? 40% of global energy
? 25% of global water
? 40% of global resources
? Emit approximately 1/3 of all greenhouse
gas emissions
On top of this, UNEP also says that residential
and commercial buildings consume
approximately 60% of the world?s electricity.
Therefore, there exists an overwhelming
opportunity for efficient IoT solutions to bring
down unnecessary consumption. Of course,
from a business perspective, intelligent sensors
gauging requirements for lighting, heating, etc.,
can drastically reduce wasted use of energy.
Some of the principal
use cases for IoT
across a city focus on
integration between the
city?s infrastructure and
the connected car. The
momentum behind the
connected car refuses to
relent.?
Telecoms.com Intelligence / Smart cities: what are the opportunities and threats for telcos?
To put energy efficiency gains into a more
realistic context, figures from PhysOrg.com
suggest the US alone wastes nearly 60% of all
energy it consumes due to inefficiencies relating
to building maintenance, heating, lighting and
transport. This, despite alleged progress being
made in renewable and sustainable energy
sources such as solar and wind.
That number is further exacerbated when
the vehicular industry is looked at in isolation.
While industrial sectors waste roughly 20%
of the energy they consume, transportation is
75% inefficient ? indicating that automotive
transport is the least efficient means of getting
from A to B. While specific predictions of energy
savings across a whole city isn?t going to be
wholly accurate at this stage, it is perfectly
valid to suggest there is an incredible amount
of room to play with in terms of reducing
energy consumption and particularly wastage
through the adoption of smart infrastructure.
PhysOrg also studied smart city efficiency gains
as part of the EU-funded BESOS project. Trials
were conducted across a range of city-based
infrastructure, and concluded that IoT rollouts
across buildings and cities have the potential
to deliver 30% cost reduction by minimising
energy inefficiency, with deployment CAPEX
being recouped within 5 years. The numbers
are beginning to back up the theory.
To extrapolate that a step further, using the
UN statistics saying 75% of global energy is
consumed by cities, the International Energy
Agency says the world consumes 12.3 TW
of power per year, the equivalent of 9,301
megatons of oil (MTOE). 9,301 MTOE equates
to approximately 66.5 billion barrels of oil. If
we were to extend the energy savings based
on smart technologies mentioned in the
previous paragraph (approximately 30%), we
can extrapolate the equivalent savings of 2,093
MTOE every year - roughly 15 billion barrels, the
equivalent of 41 million barrels of oil a day.
Despite the potential benefits of smarter
constructions, one of the biggest challenges in
all of this is ensuring broadband penetration.
For a significant percentage of cities, especially
in emerging economies, lack of broadband
infrastructure prohibits the creation of a smart
city environment. For a lot of cities, there?s a
substantial conundrum most rudimentary in its
nature, and that is how to encourage service
providers to come and participate in public
private partnerships to ensure that every citizen
gets connected.
Government support is required, of course, but
one of the principal challenges with bringing in
connectivity and working on a smart building
or city project for operators is avoiding myopia.
A short-sighted view on return on investment
will inevitably end in failure or a project aborted
before it has been concluded. A smart city or
smart buildings project won?t deliver an ROI on
a strategy based on one or two-year payback
cycles. Instead, it has to be a longer term view
over a five to 10-year period.
Separately, smart transport infrastructure
is likely to be one of the most dominant
weapons in the fight to reduce emissions
and to consume less energy resources. In
aid of targeting reduced energy emissions,
governments need to incentivise and
encourage telecoms operators to develop
infrastructure across the city which can feed
into individual building projects, without
having to take on board the entire risk or
cost. All of the elements of a smart cities
project are logical evolutions of today?s
society ? education, connectivity, reducing
carbon emission, quality of life, improving
communications and transportation. While it
is widely considered that such projects are the
way to go, what is less clear is the investment
strategy for the required infrastructure.
A united approach
What is becoming clear is that this is not an
industry that any one stake holder or player
can dominate, and that the operator is very
much to be considered to be the connectivity
glue to help integrate all of the players in that
ecosystem. Whether that be the platform
provider, or the company that analyses the
workflows in action, or the connectivity
provider, or the manufacturer of sensors and
smart infrastructure, or the city?s council or
government. That too extends to building
management and property development
organisations, particularly when defining the
use case for smart buildings. One must, too,
take into account what the residents of a city
or the organisations therein desire from an
infrastructure.
The approach of ?build it and they will come? is
one that is becoming increasingly out of touch
with modern society. Smartphone consumers
are becoming ever more expectant of a tailored
or bespoke service from their mobile operator,
and the same applies to enterprise companies
looking to design a new HQ in a city.
While FTTH is being
built-in as standard
today, is there an
opportunity for IoT
sensors and capabilities
to be developed as
standard in the future?
There would certainly
be a significant business
justification.?
Telecoms.com Intelligence / Smart cities: what are the opportunities and threats for telcos?
Before building anything, however, the basic
premise of reverse in-building intelligence into
a city?s infrastructure must be considered an
option. The biggest problem for smart cities,
particularly in the West, is legacy.
Connectivity and IoT aspirations can be swiftly
curtailed because of ageing infrastructure
that is limited in its capabilities. In some cities
across the world, basic power is a constant
struggle because transformers buried deep
underground can blow easily. In ageing
cities, maintenance teams from utilities firms
need planning permission from the council in
order to break ground in an area that wasn?t
supposed to contain old wiring.
It is a classic challenge a city will face
while developing a smart infrastructure.
In developing markets like India, however,
construction predominantly occurs above
ground. Breaking ground becomes far less
complicated when it is just electricity pipes
and sewers buried underground. Although, in
some places there are of course challenges
with ancient cities, ruins or artefacts being
buried deep underground. But even before
breaking ground, the fundamental proposition
of the city?s technology strategy needs to be
concentrated, focussed and purposeful.
Cities of the future need to have a unique
selling point; a focus that will define technology
use cases, and therefore build infrastructure
around that. To that extent, there are a number
of cities around the world whose infrastructure
has been specifically designed to allow
businesses in specific industries to thrive.
If you were to think of large scale
manufacturing, you?d probably think of
Shenzhen in China. If you think of advanced
biotech, you?d probably associate it with
Cambridge in the UK. Computer science is
synonymous with Silicon Valley, and similarly
autonomous driving with Nevada. In each
case the investment in technology has been
appropriately directed to ensure the necessary
infrastructure is in place to attract businesses
of a specific industry.
Conclusion
Throughout this paper we have been
constantly reminded that in order to achieve
the extraordinary benefits of smart cities,
and smarter building automation therein,
collaboration between multiple companies
in an ecosystem is essential. Rolling out an
arbitrary set of technologies for technology?s
sake doesn?t necessarily yield improvement,
but a predefined technology journey for citizens
and businesses of a city has the potential for
an incredible amount of positive change.
One potential route for doing so is to start
at the desired ends and working backwards
through the steps required to get there. Many
of the original smart cities projects from a
decade ago are going through a complete
replacement of the underlying technology.
The reason for this comes down to a lack of
strategic clarity, and strategies were being
developed without the full scope of the project
being defined in the first instance.
We?re now looking at a natural lifecycle of
technology replacement of roughly seven to ten
years, where the majority of technology fails
through excessive usage. From an architectural
standpoint, products need to be designed
for both scalability and upgradeability, which
relates to both hardware and software upgrades
provided over the air. The fact of the matter
is that there?s an element of futureproofing
sensors and devices in the market against a
future technology environment that?s very, very
difficult to predict. The software side of things
is slightly easier to predict, or at least rectify,
thanks to the emergence of cloud computing
and the subsequent delivery of incredible
compute power.
The combination of IoT technology, cloud
computing and superfast broadband
connectivity means that a sophisticated
strategy from building owners, management
companies and governments, in conjunction
with telecoms operators, can have the ability
to change how society operates. The potential
benefit to city councils, to businesses and to
telcos can be revolutionary, but the imperative
nature of devising a collaborative strategy
cannot be understated.
A short-sighted view on
return on investment
will inevitably end in
failure or a project
aborted before it has
been concluded. A smart
city or smart buildings
project won?t deliver an
ROI on a strategy based
on one or two-year
payback cycles. Instead,
it has to be a longer term
view over a five to 10-
year period.?
Telecoms.com Intelligence / Smart cities: what are the opportunities and threats for telcos?
InterDigital, Inc. (NASDAQ: IDCC) believes
that the Smart Cities market and its associate
segments which include Smart Buildings,
Intelligent Transportation, Energy Management,
among others, are all lucrative and growing
IoT markets. Our belief is cemented by our own
investment and initial successes in those areas.
We have seen first hand how these segments can
carry legacy burdens and regulatory challenges
which are often more exemplified in developed
rather than in emerging markets. We have
also seen the demand for more standardized
approaches and the absolute necessity of
partnerships. This is why we believe that Telecom
Operators are in a great position to step up and
take a lead in Smart Cities markets. They are
deeply familiar with regulations, standardization,
and large infrastructure management or network
overhauls. Furthermore, they have the existing
relationships with different ecosystem players to
be able to drive a more collaborative and unified
strategy.
InterDigital provides horizontal solutions that
integrate and manage connected devices
and data feeds across industries and diverse
communication networks. This is our own way
to solve existing challenges and foster further
market growth. With our wot.ioTM solution,
we facilitate aggregation and transformation
of varied, disparate and legacy data sources
into unified systems. With our oneMPOWER?
solution, which conforms to the global oneM2M?
standard for the IoT, we take a long-term view
of an open standard which lowers the risk of
vendor and technology lock-in while future-
proofing investments to capitalize on future IoT
innovations.
In two complementary smart city applications,
oneTRANSPORT? and Smart Routing, InterDigital?s
oneMPOWER? powered by wot.io? platform
is being used to demonstrate the world?s
first open and scalable IoT platform enabling
multi-region, multi-modal and multi-system
transport integration across geographies in
the United Kingdom. Working with 14 other
public-private partners, this solution is driven by
dynamic business models which are supported
by a brokerage structure based on an open
marketplace for data and services. Similarly,
InterDigital is developing other Smart Cities
solutions such as Environmental Monitoring or
Smart Buildings and Energy Management with its
premier partners such as HARMAN International
(NYSE: HAR).
Sponsor?s Comment
For more information,
visit http://www.telecoms.com

About InterDigital

InterDigital develops mobile technologies that are at the core of devices, networks, and services worldwide. We solve many of the industry's most critical and complex technical challenges, inventing solutions for more efficient broadband networks and a richer multimedia experience years ahead of market deployment.